Category: Class Warfare Page 12 of 36

The Course of Empire by Thomas Cole

Covid is one of those disasters which tests whomever it happens to. Countries like Vietnam and Taiwan and even Germany stayed on top of it, or got ahead of it, and are doing fine. Those who mishandled it are taking some hard hits.

This isn’t primarily about deaths, though those are awful, it is about the mishandling of the economy. In Canada, there’s a benefit of $2,000 dollars per month for which most people who lost their jobs qualify. Other countries have done even better: freezing mortgage payments, rent, and so on, and organizing food delivery.

In the US, we have predictions of a 30 percent unemployment rate. I just saw that less than half of Los Angeles county still has a job.

The bailout for regular people is $1,200. In a place like Los Angeles, that won’t even cover most people’s rent.

There’s been a vast bailout, mainly–though not exclusively–through the Fed, for the rich. Basically, as much free money at the trough as they can gorge on.

But small businesses are toast. A third of households, at least, are on the verge of not just homelessness but not being able to eat.

Meanwhile we have a lovely display of typical US business incompetence. The US’s logistics system is a wonder of the world, but it was created in the 80s and 90s by people who are retired or dead now. Meat packing plants are shutting down because of multiple cases, truckers and warehouse workers are getting sick and scared. Farmers complain of problems getting workers. The price of beef for farmers has crashed through the floor, but they can’t get the animals to consumers.

Meanwhile, multiple states have not instituted isolation, and there are “protests,” backed by Republicans, to reopen states that have.

Not isolating nationally means there are pockets of plague which are still expanding exponentially, and which can reinfect the areas which did isolate. Coming out of isolation too soon will mean that cases will explode again a month to a month and a half after self-isolation ends.

The job issues mean trouble. People who can’t afford food become violent. Food riots bring down nations.

Assuming these storms are weathered, or that Americans are so beaten down they won’t riot even when starving, when the economy does re-open, many of the jobs will be gone. People who did not earn during the time down will still have to pay back-rent. At best, their spending is crippled, at worst they get evicted.

Many landlords will lose their property in any case, many small businesses will go bankrupt and never re-appear. The likely scenario, longer term “after” the Coronavirus is another ten-year depression, except this one is likely to be a deflationary depression: No one but the rich has money, and no one is spending.

But imagine the fairly standard scenario of multiple waves of coronavirus with multiple waves of self-isolation. No national policy, so some states stay open as others are closed. People in warehouses keep getting hit, logistics people get hit, migrant workers get hit or can’t even get into the country.

The system, already drawn tight to extract maximum profit and efficiency, starts breaking. Prices surge, there are actual shortages in many places.

This is some months out, I’d guess, although this is the sort of scenario that goes from “eh, it’s OK” to BOOM very, very fast when it does go.

The US is fragile. The choice to not freeze mortgages, rent, interest payments and so on, and to not bail out ordinary people as I instructed is going to explain to the rich that it is everyone else who makes the actual economy run.

There is a real economy, Virginia, and if it freezes up, there will be hell to pay. Logistics workers need PPE and they need them now. Freezes of rent, mortgages, interest payments, and so on, need to be done now. If a complete idiot wasn’t running the country, taking national control of when states close and reopen should happen now. I would suggest that if Americans don’t want their country in a new great depression, that they find a way to depose Trump now, and if Pence won’t be competent, ditch him too.

There is a chance that the US will fumble through, as governors and mayors who aren’t complete incompetents (and the rare, actual competent governor, which doesn’t include New York’s Cuomo), plus the rare competent CEOs, manage to hold thing together–barely.

But right now, this is looking like an epic clusterfuck.

Remember, however, when the riots come, if they do, if you won’t just die quietly for the peace of your masters, to go to where they live, or where the Fed employees live, and riot there. Explain to them about what people do to fat, happy, rich people when they can’t eat.

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Or, I should say, rather, of the Fed and Congress’s actions.

The Federal Reserve has spent one trillion a day for 30 days (when this is over, they’ll have spent more) to prop up markets and financial firms. They’re buying debt, and making non-recourse loans (non-recourse means there is no penalty for not paying the loan back).

Congress’s deal, includes $350 billion for small businesses, and $1,200 for individuals, +$500 per child, and some excellent provisions for laid off workers–but this is a one time payment, and if things go on, how many more be passed when business has their bailout? It also has some fairly stringent restrictions on stock buybacks and executive compensation.

But most of the bailing out, in this crisis (as in 2008), will be done through the Federal Reserve, whose operations dwarf those of Congress and the Treasury department.

Assuming this crisis goes on for months, in waves, which is what the science seems to say, predicting the end result is simple: A lot of small businesses will go out of business. A lot of people will lose their homes, and a lot of small landlords (not large ones) will lose their property.

Companies which are bailed out, and companies and individuals with strong cash positions going in, like private equity, will then do what they did after 2008: They’ll buy up distressed assets for dimes on the dollar and wind up owning more of the economy than they did going in. Industries will consolidate, as smaller firms go under, and the remaining companies will be even too-bigger-to-fail.

Must it be this way? No. Will it be this way? Assuming the policies continue as they are, yup. But there’s a lot of road to go, and when people start dying in droves the calculus may change if the politics change. In particular, if people truly can’t afford to eat or pay rent, in large numbers, things may get nasty. It’ll be interesting to see just how whipped Americans are: Are there circumstances under which they’ll actually revolt in a way that hurts elites?

A lot of this depends on how the pandemic plays out. If Trump and idiot governors can be convinced to stick out isolation, probably they’ll be able to slide by. If not, things will get ugly.

Much will also depend on whether Republicans want more bailouts through fiscal policy for corporations. If they don’t, they will resist sufficient money for ordinary people, which will make things worse (and cause people to break isolation).

It’s going to be an interesting few months.

But basically, nothing has changed in ruling lass ideology: Every crisis is to be used to increase the share of the economy, national wealth, and the income that the rich control.

So for this crisis is no exception.

(Update: Matt Stoller reports there’s trillions more dollars of giveaways:

So that’s the stuff that’s been reported. Here’s what hasn’t, and why the bill goes up in value to $6-10 trillion.

• An additional $4 trillion from the Federal Reserve in lending power to be lent to big corporations and banks.
• Authorization to bail out money market funds, multi-trillion dollar unregulated bank-like deposits for the superrich.
• Authorization for the the government through the Federal Deposit Insurance Corporation to guarantee trillions of dollars of risky bank debt.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

So, we’re going into a recession, and will likely soon be in a depression. Why? Because the workers have to stay home. It seems that the workers, do, after all, create the value.

Marx giggles in his grave.

We notice also who actually matters, who is actually necessary in society. The people who grow food. The people who take care of sick people. The people who make medicine. The people who distribute food and goods. The grocery and drug store workers. The garbage men. The people who work in sewage, water, power, and keeping the telecom backbone up.

Everyone else? Might be nice to have, but they aren’t necessary, and that includes most of the bosses. Some coordination is needed, yes, but it’s not as rare a skill as bosses like to pretend.

Meanwhile, we have makers making ventilator valves, as firms threaten to sue them stop them. It turns out that a valve which can be made for $1, normally costs $11,000.

There’s your capitalism, children: Ghouls who vastly overprice goods so they can get rich off of other people’s death and suffering.

Nations are scrambling to give workers forced to stay home money, because if they don’t, the economy will slide off a cliff. It turns out, as we should have learned in the Depression (and did, but forgot) that it is people who buy things; the demand, that matters if you want a great economy.

Over in China, it has been calculated that seventy-seven thousand lives were saved by the decrease in pollution caused by all the factories shutting and taking the cars off the road. Coronavirus may have saved more lives than it killed.

Now, some of what those factories produce we need (ventilators, for one, but remember the price markups), but a lot of it we don’t. We could work half as much, not have stuff we don’t need, and spend time with our friends and families. Maybe even see our kids. Wouldn’t have to have school babysit them for most of the day, because parents are away.

Just do less, divide the money more equally, and do without shit we don’t actually need.

We’d be healthier, guaranteed, as the pollution dies down and stress drops through the floor. We’d be happier, and in their spare time a lot of people would make the cool stuff they always wanted to make, but couldn’t, because they were doing corporate drone jobs.

Coronavirus is going to suck more than anything most people still alive in the West can remember (though older gays will understand.) But there’s a lesson here, if we’re willing to take it.

This is going to be a hard lesson to take, because central banks and politicians are moving to bail out the rich (they did so first, and are still doing so), and so they will retain their money and power and try to use it to buy up assets on the cheap after smaller business go bankrupt, but focus on the problem. Everything the rich have they have not because they “earned it” or because they actually create more value than a janitor or nurse, but because the laws are written to allow and the politicians and central banks funnel them endless money, while picking them up every time they fall, wiping the boo-boos off and giving them trillions of dollars.

It’s all politics, in the end. It’s all power.

Now the politicians they own, in their incompetent handling of the coronavirus, are going to be responsible for the death of millions.

These are unnecessary deaths. Countries which acted promptly and competently did not and are not seeing large numbers of deaths.

This means the politicians are guilty, at best, of negligent homicide. Death from incompetence, by corrupt, venal politicians owned by billionaires and mega-corps.

A better way is possible. But not if these people stay in power. They must be removed.

If we don’t remove these politicians and business leaders more of us will die. Many, many more.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.